Synovium-derived mesenchymal stem cells (SMSCs) are an emerging cell source for regenerative medicine applications, including osteochondral defect (OCD) repair. However, in contrast to bone marrow MSCs, scaffold compositions which promote SMSC chondrogenesis/osteogenesis are still being identified. In the present manuscript, we examine poly(ethylene) glycol (PEG)-based scaffolds containing zonally-specific biochemical cues to guide SMSC osteochondral differentiation. Specifically, SMSCs were encapsulated in PEG-based scaffolds incorporating glycosaminoglycans (hyaluronan or chondroitin-6-sulfate [CSC]), low-dose of chondrogenic and osteogenic growth factors (TGFβ1 and BMP2, respectively), or osteoinductive poly(dimethylsiloxane) (PDMS). Initial studies suggested that PEG-CSC-TGFβ1 scaffolds promoted enhanced SMSC chondrogenic differentiation, as assessed by significant increases in Sox9 and aggrecan. Conversely, PEG-PDMS-BMP2 scaffolds stimulated increased levels of osteoblastic markers with significant mineral deposition. A “Transition” zone formulation was then developed containing a graded mixture of the chondrogenic and osteogenic signals present in the PEG-CSC-TGFβ1 and PEG-PDMS-BMP2 constructs. SMSCs within the “Transition” formulation displayed a phenotypic profile similar to hypertrophic chondrocytes, with the highest expression of collagen X, intermediate levels of osteopontin, and mineralization levels equivalent to “bone” formulations. Overall, these results suggest that a graded transition from PEG-CSC-TGFβ1 to PEG-PDMS-BMP2 scaffolds elicits a gradual SMSC phenotypic shift from chondrocyte to hypertrophic chondrocyte to osteoblast-like. As such, further development of these scaffold formulations for use in SMSC-based OCD repair is warranted.